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01/06/2008

Terrorism and Economic Development--Posner's Comment

I agree with Becker's analysis as far as it goes, but I question whether the amount of terrorism is highly sensitive to economic development, to which the "demographic transition"--the well-documented tendency of birth rates (also death rates) to decline sharply when a nation reaches a threshold level of economic development--contributes. When birth and death rates decline, the average age of the population rises, which is a stabilizing force, the number of young men declines, and the economic opportunities of the young are greater because there are fewer young. So the number of potential foot soldiers for terrorism is diminished, as it is by anything that raises the opportunity costs of prospective terrorist recruits. But how important are those opportunity costs to the amount of terrorism?
It is helpful to think of terrorism as of other goods and services in demand and supply terms. There is a demand for terrorism, and a supply of terrorism, and the intersection of demand and supply gives the amount of terrorism. Terrorism is a political phenomenon, and the demand is driven mainly by political grievances, real or imagined. Often the grievances are related to foreign occupation. France in Algeria; the British in Palestine; now the Israelis in the West Bank; the United States in Iraq (and earlier in the Philippines)--though in the case of Islamic terrorism, the major factor seems to be the Western "presence" in the Middle East, rather than foreign occupation; even Israel's occupation of the West Bank seems a subsidiary factor. And the Baader-Meinhoff gang in West Germany, the Red Brigades in Italy, and Aun Shirikyo in Japan are examples of terrorist groups unrelated to foreign occupation. But it is the existence of grievance that is key, and often--probably typically--the grievance is political rather than economic.
If demand for terrorism is grievance-driven, then one can expect the supply of terrorists to come mainly from the intelligentsia, for the members of the intelligentsia are more likely than ordinary people to be moved by ideas, resentments, and political ambitions rather than by material concerns. They have the leisure and the education to think big thoughts, like overthrowing a government, which rarely brings material improvements.
Nor is it the case that the intelligentsia supplies merely the leaders, who then send their simple-minded followers to destruction. The leaders are at risk themselves; more important, the perpetrators of the actual terrorist attacks tend to be middle class (though the second intifada, mentioned by Becker, may be an exception). From a labor-market standpoint, there are two important tradeoffs in recruiting a supply of terrorists: quality-quantity, and capital-labor, and they are related. Because terrorists tend to be few in number if only because of the need for concealment, and to be operating in a hostile environment, the recruitment of a large number of poorly trained and motivated cannon fodder is unlikely to be optimal; they are likely to give the game away. Moreover, the most effective terrorism requires some technical sophistication (such as piloting an airplane), and this is a further reason for terrorist leaders to recruit high-quality personnel.
The relation of economic development in general or the demographic transition in particular to terrorism is likely to be extremely indirect, and is probably small. If one looks at a list of 195 countries ranked by birth rate, see http://en.wikipedia.org/wiki/List_of_countries_by_birth_rate, one discovers that of the 25 nations with the highest birth rates, all but one (Afghanistan) are in Africa, and Africa has not proved to be a major source of terrorists relative to its vast population. Pakistan has the world‚Äôs 57th highest birth rate--27.2 per thousand. This is high--replacement is 21; the U.S. birth rate 14; Germany‚Äôs 8.2--and Pakistan is often used as an illustration of a nation that has not made the demographic transition yet. Saudi Arabia, that cradle of Islamic terrorism, has a lower birth rate--24.2--though it is still high. On the other hand, Saudi Arabia is a relatively wealthy country by international standards; its per capita income is similar to that of Poland and Chile. Algeria, with a birth rate (20.8) considerably below Saudia Arabia's, has a severe terrorism problem. Jordan has a substantially higher birth rate than Algeria (in fact it is only slightly lower than Pakistan's), but is not a hotbed of terrorism.
All this said, there is some negative correlation between birth rates and terrorism in Muslim countries, but it is weak, and probably swamped by other factors. The major factor in Islamic terrorism may have nothing directly to do with economic development or the factors that influence it; it may simply be the influence of extremist Islamic religious beliefs in particular Muslim nations and communities.

Interesting, as always well written, informative comments by Judge Posner. In the book IN THE LINE OF FIRE by Pervez Musharraf his style of writing does not appear to parallel a western leader's writing such as Colin Powell in MY AMERICAN DREAM. It seems like military affiliation was the only open avenue for an amibtious young man in Pakistan. Economics always play a part in every person's behavior, consciously or unconsciously. Group affiliaton, group think, and herd behavior seem to be influenced by family of origin and pre age 5 personality traits. The gangs in Pakistan, Iran, Iraq, and the other 'stans' are probably not that much different from bored US, Canadian, English, or French youth who feel alieanated, unloved, disenfranchised and who most probably have horrible diets and who also may be abusing alcohol and or drugs -- except of course the terrorist youth are engaging in more destructive activities.

Saudi Arabia, that cradle of Islamic terrorism, has a lower birth rate--24.2--though it is still high. On the other hand, Saudi Arabia is a relatively wealthy country by international standards; its per capita income is similar to that of Poland and Chile. Algeria, with a birth rate (20.8) considerably below Saudia Arabia's, has a severe terrorism problem. Jordan has a substantially higher birth rate than Algeria (in fact it is only slightly lower than Pakistan's), but is not a hotbed of terrorism.

One factor that you've missed about Saudi Arabia is that even though it is a wealthy nation, it is a nation mired by bureaucracy and tight regulations on economic freedom. Recent Labor Ministry efforts to change the spirit of domestic entrepreneurship have been for the most part in effective. These same efforts to increase foreign small industries investment have as well. Most of these efforts give lip service to empowering people economically and politically, however the educational system still promotes an entitlement ideology that encourages the welfare state.
Corruption and favoritism add to the frustration of people who are taught in their school system that they were favored by God to be given oil wealth, yet for the most part do not see it.
Most Saudis feel that it is below them to work anything other than upper level position, be that in management or otherwise. Even high earning positions such as process engineering, medicine, and IT are not explored because of the work ethic.

The problem is not with extremist religious beliefs, as the Government and Mosques of the country have been consistent against terrorism and extremism. The problem is not allowing greater distribution of wealth along with supporting not only virtual monopolies on that wealth but also the means to it. This has created the worst type of welfare dependent consumer. All rights, no responisbiltiies. Without encouraging a strong work ethic and providing practical means to wealth creation, citizens of the KSA will always be frustrated. Frustation along with feelings of disenfranchisement will only make them more vunerable to those that use religion to further their own political and economic beliefs. In short the involvement of religion in the case of the KSA terrorism is a coincidence, not a cause.

The real issue is not the money or that lack of it, nor the economic development per se.
The real issue is the freedom to create that wealth, the incentive to do so, and the ethic to support it.
These cannot be quantified in dollar signs and birth rates.

Judge Posner's comment on terrorism and economic development seems to me to be uncharacteristically opaque.

"If the demand for terrorism is grievance-driven" (an unargued and dubious assumption), the impact of economic development would seem to be a minor consideration in the effort to reduce the incidence of terrorism. Better to simply adopt some version of Ron Paul's isolationism and try to provoke potential terrorists as little as possible.

On the other hand, if "The major factor in Islamic terrorism. . .may simply be the influence of extremist Islamic religious beliefs in particular Muslim nations and communities," both political grievance and economic development are largely irrelevant. What exactly is Judge Posner's point?

Terrorism is grievance driven: simply listen to any arab media, or any speech by a leader even remotely close to terrorism organisation; one word will come again and again: martyr. Anyone dying because of Isreali, or Western, or any non-arab action is labeled a martyr ‚Äî including a road accident. Look at death tolls to realize the massive scale of the issue: if you try to plot the ‚Äúmartyr‚Äù deaths of the last years next to 9/11 & Americans deaths in Iraq, the later would not even be the width of the pen, or a pixel.

I don't understand what would be a ‚Äúdemand‚Äù and an ‚Äùoffer‚Äù of terrorism: I centainly agree with the combination of grief and feeling disenfranchised ‚Äî¬†but are you considering the educated terrorists as entrepreneurs that hire the less educated candidates? Or are you looking at people producing acts of terrrorism and people receiving them? On the later case, I would argue the agents are too irrational, and know too little about each other to apply standard economics.

A classical model that would be better suited might be the European cadets in the XII-XVIIth century: life expectancy was enough for them to live, but law still deprived them from any rights‚Äî‚Äîviolence was the only issue, be it Crusades, War or the New World: at that time Transatlantic crossing had a death likeliihod similar to being a suicide-bomber.

Would I be misguided in understanding that the opportinity costs are such, and the opinion in Pakistan so anti-American that the only solution to terrorism is to have a Muslim-litterate American president? It is becoming the most likely outcome tonight, but as always, I like to check my interpretations.

It is indisputably true that those who commit acts of terrorism, or attempt to justify them, speak endlessly of their "grievances." But to demonstrate that terrorist acts are grievance-drenched is not to show that they are grievance-driven, if that means they have specific complaints, which, if addressed, would put an end to the incentive for the violence.

One can certainly think of terrorist campaigns that do seem to fit this model--Irish nationalist terrorism, the Basque separtist movement, or Tamil resistance in Sri Lanka, for example--but many others do not. The violence inspired by al Qaeda or the Baader Meinhoff gang seems more like the expression of an ideology than a strategy for removing their grievances, since their principal "grievance" is nothing less than the world's failure to conform to their belief system. Describing this behavior as "grievance-driven" strikes me as odd.

There are several factors at play, factors which include concrete notions of economic security and manageable family size, but which also include some nebulous concepts like a cultural commitment to scholarship and tolerance.

I agree that grievances are at the core of terrorism, but the relationship between grievances and economic growth I think is complex and contradictory, ultimately I think economic growth and political freedom undermines terrorist impulses in the long term, but in the short term the effects are uncertain.

Take for example on result of economic growth that Becker noted, the reduction of the extended family. The reduction of the extended family is actually greater than Posner suggested because economic growth tends to increase migration as the ability to become mobile arises before a local job market capable of satisfying the population growth of local youth becomes possible (if it ever becomes possible as some areas are good for raising populations but bad for jobs (for example suburbs and cities)). When the young move away, extended families become weaker, they tend not to disappear as they did with migrants of earlier eras since the mobility allows people to go both ways, but still there's never the same grip to extended families as there were in previous years.

But the effect of the reduction of extended families is uncertain on terrorism. Families often provide the recruitment network for terrorists and supply safe grounds (notice the interplay of tribe loyalties and terrorist networks in Iraq). Family deaths also provide for motivations for terrorism and motivation for the support of terrorism or at least for the apathy to anti-terrorist efforts. Strong family ties also reduce individualism and increase the chances of someone taking up collective grievances.

But on the other hand, the lack of a strong family grip reduces the in-built ideologies of a society and opens the grounds for radical ideologies. Take for example Muslim youths in Britan who tend to be more radical than their immigrant parents. The reduction of family ties also sends youth searching out for authority figures and thus more likely to be taken by charismatic radicals.

Thus there is a mixed picture.

However, other effects of economic growth further complicate the picture. Economic growth tends to progress unevenly, either in terms of pure money or in terms of the power acquired by the government and its officials through economic growth. This tends to breed grievances based on people realizing how much better life could be and perceptions of unfairness.

However lack of economic growth also helps terrorism. To manage in the modern world, every country requires an intellectual class, and without sufficient economic growth this intellectual class is often idle or their partially educated children are idle and likely somewhat unemployed, and thus ripe for radicalism. Also, lack of economic growth tends to support the idea that the nation has fallen behind as a great power. People always like to feel like their part of a great power and economic growth makes people feel like if they are not part of a great power they are becoming part of one. Much of the discontent in the Muslim world is from the idea that the Muslim world has fallen behind the West and thus it must become a great power by any means necessarily.

However, ultimately, I think economic growth and political freedom tend to undermine the radical grievances that spawn terrorism by providing avenues for moderate grievances to be satisfied (unsatisfied moderate grievances have a tendency to breed radicalism, for example, the demands of early 19th century Russian radicals were largely moderate liberal ideas, but left unsatisfied they either reversed themselves into radical conservatism or they concluded that change required society overthrow so they turned to radicalism). Furthermore, economic growth tends to A. keep people busy by giving more jobs and more stuff to do, and B. allow more materialism to spread (materialism can spawn terrorism if unsatisfied, take for example gangs, but in an environment where society allows material improvement, materialists support stability because it protects their economic opportunity, take for example many businessmen in coastal China).

I could go on more, but I think it's not that economic growth has no effect on terrorism, but rather it has mixed effects, although ultimately it undermines terrorism. It's hard to prove such a claim though, since long term can be 100+ years, and historical examples may have key differences from the modern world, but if I were to try to prove it I would probably trace the historical amount of terrorism in currently rich countries in comparison to their historical economic growth (as a case study (which is not a conclusive proof by any means) take the United States, the US only achieved massively widespread economic growth in the '50's, the radical change in society and new intellectual class which often lacked opportunities or sense of belonging (especially amoung minorities) took to arms in the 60's achieving some minor support among lower classes, however over time this amount of terrorism died down, although there still are terrorists most of their demands are society related rather than economic related (cultural reform, inequality rather than poverty, ultra-nationalism, non-economic political issues (such as abortion))).

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